DuPage water commission loan's cost may rise

If the DuPage Water Commission chooses to extend the $30 million emergency loan it took out late last year, taxpayers could be on the hook for an additional $750,000 in interest costs.

The commission moved forward Thursday with plans to begin negotiations to extend the loan, so it'd have more time to pay it off. West Suburban Bank holds the note on the loan and gave the agency an interest rate of 1.25 percent for what was initially a one-year loan. That amounted to $375,000 extra in interest costs.

Bank officials have told the commission that if the loan is extended an extra year it will be at a rate of 2.5 percent. If all $30 million is extended, that would amount to three-quarters of a million dollars in additional interest costs.

There are also options to extend the loan several more years and possibly extend a second $40 million loan that is costing taxpayers $1 million in interest costs this year.

But the commission's interim financial administrator, Rick Skiba, believes some of the loan could be paid back before it is extended. Skiba also said extending the loans could save the commission money on fees associated with the loans.

One of the commission's newest members, Phil Suess, questioned the interest rate the bank was offering and suggested the commission's loan negotiators look elsewhere for extension options. Suess said he didn't believe interest rates should be more than 2 percent.

But most commissioners seem resigned to the fact that the loan will have to be extended.

"I don't see where we can do it any other way," Commissioner Frank Saverino said.

The combined $70 million loans were necessary after it was discovered the commission had accidentally spent its $69 million reserve late last year. A forensic audit conducted in the wake of the discovery of the misspent funds indicated the mistakes occurred because of poor accounting practices and lackadaisical oversight of the former financial administrator. The fallout resulted in the financial administrator being fired and both the commission's treasurer and general manager resigning.

Gov. Pat Quinn signed a reform bill recently that requires all 13 commission members to resign by the end of the year and dissolves the commission's quarter-cent sales tax by 2016.

The water commission is responsible for providing Lake Michigan water to more than two dozen municipalities and agencies in the county.

Cost: Members resigned to extending loan